Speech by President Barroso at the EP plenary session on the conclusions of the European Council meeting of 27-28 June 2013

European Parliament/Strasbourg

2 July 2013

President,

President of the European Council,

Honourable members,

Ladies and gentlemen,

Let me start by welcoming the new Members of this Parliament from Croatia. On behalf of the European Commission and in front of this House, I want to wholeheartedly welcome Croatia as 28th Member State of the European Union.

Before entering in the subject of the debate of today, there is an issue of political importance that I would like to raise immediately, as this is the first opportunity that I have to do it in front of this House.

It concerns the news over the last days of American activities in the European Union and Member States.

If these news are proven true, this would be very disturbing and raise serious and very important concerns. This is why as soon as media reports were released, we have immediately requested from the US a full and immediate clarification on the matter. The High Representative and Vice-President Ashton, who has the competence in these matters, and her services have raised the issue with the US; she has discussed it personally with State Secretary Kerry. Yesterday the Executive Secretary General of the EEAS Pierre Vimont requested the US Ambassador to the EU to meet with him at EEAS headquarters.

The Commission will also address this issue in the context of the working group of experts that is being set up by Vice-President Reding and Commissioner Malmström together with the Council Presidency, from the EU side, and with US Attorney General Holder from the US side, to exchange information on intelligence collection of information and get clarity notably on the PRISM programme.

The Commission expects clarity and transparency from partners and allies, and this is what we expect from our United States partners.

Honourable Members,

Over the last months and years, the European Union had made an impressive and unprecedented effort to stabilise the Euro and adapt our structures and policies to meet the challenges posed by the crisis.

And yet, we have a lot of work to do before we can leave the crisis behind. As I said to the European Council last week: the crisis is not over. We should not relax our efforts for stability and growth through completion of the EMU, correcting our public finances, structural reforms for competitiveness and targeted investments for growth.

The June European Council was precisely about everyone taking up his responsibility. I believe it has delivered some very important results: by endorsing the Country-specific recommendations for structural reforms as proposed by the Commission, by stepping up the fight against youth unemployment, and by taking decisions aimed at restoring normal lending to the real economy, notably to SMEs.

Ladies and gentlemen,

I have to mention first one result that was achieved a few hours before this Summit actually started, and which turned out to be a pre-condition for this Summit to be considered a success.

I am talking about the political agreement on the Multi-Annual Financial Framework, reached in the morning of Thursday 27 June between the Irish Taoiseach, the President of the European Parliament, and myself.

I was delighted that both the President Schulz and Taoiseach Kenny, holding the Presidency of the Council, were able to accept my invitation and strike this political deal, of course without prejudice to the final decision of this house and the formal decision of the Council. The deal reached was based on very extensive negotiations conducted by the Council, Parliament and Commission and their respective teams – I want to congratulate all of them - and I hope it will be formally endorsed both by you and by the Council.

The extremely challenging dynamics of the negotiation process – unanimity in the Council, consent by absolute majority in Parliament – mean that nobody was able to reach all of their objectives. This is why – even though the Commission has always supported a more ambitious European budget - I consider this agreement a crucial step for the European Union in demonstrating its capacity to act and to take difficult decisions.

The EU budget is an almost 1 trillion euro investment fund for growth and jobs. Without it, everything we are trying to do for growth, for investment, for the regions, for young people, for employment, for research … would all be put at risk.

Honourable members,

In terms of the structural reforms needed to get our socio-economic framework in line with the demands of today's global economy, the agenda was set out clearly in the Annual Growth Survey and, in particular, in the country-specific recommendations as presented by the Commission five weeks ago.

With the endorsement of these recommendations by the European Council, a new step was taken in the European Semester process. Economic governance in the EU has reached a new stage of maturity and common ownership.

Everyone can now see that this is not a top-down process, with the Commission telling member states what to do. But governments now should accept that reform in one country – or lack of reform – seriously impacts on neighbours and economic partners across Europe and sometimes across the world. We are all in this together, so we have to cooperate and co-ordinate, debate and decide together as well.

This is what an economic union implies.

This is economic governance at work.

And it is working.

Now, we have to make our common efforts to work to tackle some of the social and economic challenges we are facing together.

Youth unemployment especially.

Most of the groundwork to turn this economically untenable and socially unacceptable situation around must be done at national level. Therefore the Commission had proposed specific recommendations on youth unemployment for 19 countries: from the reform of labour markets to the reinforcement of public employment services, from shifting taxation away from labour to improving education for the low-skilled or supporting programmes for training and apprenticeships... There is a lot that national governments can and must do.

I welcome that the European Council has clearly underlined that message. Now, governments must honour their commitments.

European institutions are there to guide and support this effort, in particular through the structural funds:

- We will speed up the Youth Employment Initiative and frontload the funds so that the initial 6 billion euro is invested in the following two years and not spread thinly over the full seven years of the MFF period. If we want this money to really make a difference, we need to focus it on regions with youth unemployment rates of over 25% and do it quickly.

That is only possible if member states prepare specific Youth Unemployment Initiative programmes and submit their plans during this year still, so that we can hit the ground running early in 2014.

And as this House rightly stressed in the MFF discussions, we need to guarantee funds for the years afterwards as well, so now – thanks to the increased flexibility that the European Commission has always supported and that was finally agreed by the Member States - the total amount spent on youth unemployment over the seven years can be estimated to end up above 8 billion euro.

- We also need to re-launch and expand the Youth Employment Action Teams. Since we set them up early in 2012, these teams have helped 8 Member States reallocate around 16 billion euro in structural funds to the most pressing needs, to the benefit of about 1 million young people and 55.000 SMEs. The new teams would be sent to help countries prepare their Youth Employment Initiative projects and implement the Youth Guarantee scheme.

- On top of this, we will boost the mobility of young workers - one of the unfulfilled promises of the internal market so far - through a reform of EURES, which already gives access to over 1.4 million vacancies in Europe and nearly 31.000 registered employers across the European Union. - Later today, in the margins of the WorldSkills competition in Leipzig, the European Commission will launch another important initiative, following the Grand Coalition for Digital Jobs we set up earlier. We will launch today the European Alliance for Apprenticeships, because not everything can be done by governments or other public institutions. We should mobilise also the social partners. I believe business can do more to help create more and better quality apprenticeships.

Before the European Council we met with the European social partners and I was happy to see that all of them, trade unions and business organisations, were very committed to a stronger response from Europe.

- And tomorrow, together with some twenty Heads of State and Government and labour ministers, also with the President of the European Paliament, we are meeting in Berlin to add to the momentum of the fight against youth unemployment.

All taken together, ladies and gentlemen, I would say: finally youth employment as a top priority seems an idea whose time has come.

But ideas are not enough.

Our young people need actions, they need decisions, they need jobs.

So let's do it.

Honourable members,

The June European Council also made a priority of measures to support financing to small and medium-sized enterprises.

I welcome that the European Council, based on the recommendations in the joint report by the Commission and the EIB, supported much-needed action in this field.

Following the increase of its capital - that we were the first to advocate - the extra EIB activities are expected to increase its lending activity in the European Union by at least 40% between 2013 and 2015, with a particular focus on innovation and skills, SME financing, resources efficiency and strategic infrastructure.

In our joint report with the EIB the European Commission has outlined a number of options for launching ambitious joint risk-sharing financial instruments to leverage private sector and capital markets investments in SMEs in the very near future. Our proposals aim at fully exploiting the joint potential of structural funds together with loans of the EIB. The Council committed Member States to do their part of the further preparatory work in order for these instruments to be fully operational by January 2014.

It was also agreed to accelerate the implementation of the project bonds pilot phase - with 9 projects in 6 countries in the pipeline already - of which the Commission will present its assessment later this year.

With our communication on the Top Ten-consultation of SMEs, we urge all parties involved to take a long hard look at themselves to see if their role in legislation is a burden or a help to SMEs. We should always try to lighten the load of regulation where possible without lowering our standards or losing sight of the agreed common European goals.

Ladies and gentlemen,

I believe these are key issues that determine, in the short term, both the effectiveness and the legitimacy of our reform efforts.

With the Compact for Jobs and Growth we wanted to pool and reinforce the broader agenda of measures to support growth as a priority.

One year on, and based on the comprehensive implementation report I presented to the European Council, and it is now of course publicly available, we can only conclude, regarding this Compact for Growth, that follow-up has been a mixed success.

There have been some real breakthroughs, such as the recent agreement on professional qualifications and public procurement, but in other areas progress has been uneven or simply too slow.

We must speed up on the Single Market Act proposals, on the digital single market, the internal energy market and the European research area.

Time is running out, so I hope to be able to count on your persistent and powerful support to push through as much of our growth and jobs agenda as possible by the end of the mandate of this Parliament.

And of course, decisions at European level are not the same as implementation at national level, so my message to the European Council was also clear: Europe's economic recovery must begin at home.

The last point I would like to mention is the deepening of the Economic and Monetary Union.

One of the main reasons why we have been able to overcome the existential threat to the euro is that the European institutions and Member States have signalled their determination to learn the lessons of the crisis, to complete the EMU, and to make it irreversible.

We cannot backtrack on that promise.

The only way is forward, as set out in our Blueprint towards a deep and genuine EMU. But sometimes we receive conflicting signals on the political will to move further.

Last week we saw an important breakthrough with the Council's agreement on a common approach to dealing with failing banks without relying on taxpayers' money. The Commission is now looking forward to working closely with Parliament with a view to finalising this by the end of the year at the latest.

The next step is a Single Resolution Mechanism, on which the Commission will present its proposal in the next two weeks, and I hope that we can make swift progress on that. This will ensure effective European decision-making on problematic banks within the Single Supervisory Mechanism.

Honourable members,

The forthcoming implementation of the two-pack takes us one step closer to a fiscal union.

Today, I'd like to announce that, following our commitment towards the European Parliament as part of the overall agreement on the Two-Pack, the Commission is now setting up the Expert Group to look into all merits and risks, the legal requirements and the financial consequences of initiatives of joint issuance of debt in the form of a redemption fund and eurobills. The members of the group chaired by Gertrude Tumpel-Gugerell, former member of the Executive Board of the ECB, will combine impressive expertise and varied background. I trust it will make a very good contribution for further work, namely by the Commission and by this Parliament.

Last week in the European Council we also discussed the other building blocks of the EMU, based on the Commission's ideas on ex ante policy coordination and the Competitiveness and Convergence Instrument. And we will soon present a report on the social dimension of the EMU, which is an essential complement to fiscal and political integration.

Ladies and gentlemen,

Honourable members,

To leave the crisis behind and namely to address the economic and social priority of fighting unemployment, we need to centre our attention to small and medium-sized enterprises, which form the heart of the European economy, and the issues that matter for European competitiveness.

To continue on the path of structural reforms, the younger generations need to see a future for themselves.

To recover the confidence of investors and citizens alike, we need to keep the momentum of our efforts to reform the institutional set-up of the EMU going.

This European Council was certainly a contribution to make progress, and we should leave no doubt about what the next steps towards growth and jobs will be.